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9 Steps to Owning a Home as a Newcomer

As you settle into Canada, homeownership may be something you consider for you and your family. Owning your own home is a dream for many people, but for the first-time home buyer in Canada, there are many steps to go through before it becomes a reality. Below are nine steps that will help you in buying your first home in Canada.

Step #1: Decide if homeownership is right for you

Buying a new home is a large financial commitment, especially if you've recently moved to Canada, so one of the first steps to buying a house in Canada is to decide whether it is the best option for you. Start by asking yourself the following questions:

  • What makes sense financially? Scotiabank offers a “Rent or Own” online tool to help compare mortgage and rent payments.
  • What is your credit score? A big part of obtaining funding for a home is having a stable credit history (Read our previous article on credit). That can be especially difficult for new immigrants who might be starting over building credit in a new country. Waiting to build your score might help you get a better mortgage rate.
  • Are you aware of the additional costs that come with homeownership? This article recaps some of the extra fees that come with buying a first home in Canada.

Step #2: Find out what you can afford

A majority of Canadians borrow money, using a mortgage, to buy their first home. Before you start looking for a home, determine what you can afford. Scotiabank offers an online tool to calculate the maximum purchase price you can manage.

Next, consider meeting with a Scotiabank advisor to start the mortgage pre-approval process. ( A pre-approval is when a mortgage lender looks at your finances to determine the maximum amount they will lend you. The actual amount you get will depend on the value of your home and amount of your down payment.) Typically, the pre-approval is valid from 60 to 120 days before the offer expires. While this step isn't necessary, Canada has different credit requirements around mortgages so even if you make the same amount as you did in your home country, you might not qualify to borrow the same amount here. Getting a pre-approval will let you know what price range you should consider when you start looking for a new home and will help you better navigate how to make an offer on a house in Canada.

Step #3: Seek out support

There are many options in Canada to help you on your journey to buying a first home in Canada. You can work with a real estate agent, access real estate services online, or buy your home privately without real estate services.

Good real estate agents are experts on the housing market, assist with the large amount of paperwork required to complete a home sale, negotiate on the final purchase price and provide overall guidance and support. To find a real estate agent, ask those in your new community if they can recommend one they have worked with before. You can also visit the website, which can help you find someone with a good reputation. Alternatively, Scotiabank's mobile mortgage specialists can refer you to a trusted real estate agent partner. Real estate agents earn money through commissions, which are paid by the home seller when a purchase is made and are typically between 3% and 7% of the sale price.

Alternatively, online companies such as Purplebricks provide real estate services to customers through a more affordable fixed fee regardless of the value of the home.

Buying a home privately is also an option in Canada. This may happen if you find a home that is for sale by the owner and would like to simplify the exchange without a realtor. It is recommended that you have an expert, such as a lawyer, go over the paperwork before signing the deal to make sure you understand the details that are included. This is especially important to do if you are a newcomer to Canada, as there are people who might try to take advantage of your lack of knowledge of how real estate transactions work in Canada to scam you.

Step #4: Find the right community for you

Finding the right home in Canada also means finding a community that you would like to settle down in – something that can be harder for newcomers because you don't yet know the neighbourhoods of your new city or what kinds of communities you might like best. Here are some things to think about:

  • Children: If you have children, will it be important to live within walking distance of school or daycare?
  • Rural or Urban: Do you like being near the city centre or are you looking for a quieter community with a smaller population? This will likely impact the size of your home or apartment – since if you like more space you might be able to get a larger home in a smaller community.
  • Cultural: Do you want to live close to your place of worship or cultural community centre? Are there particular areas in the city where immigrants with your cultural or religious background live?
  • Public Transportation: Will you need access to public transit? (i.e. bus, subway, commuter train)

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Step #5: Make the offer

Once you have found a home you like and can afford, you (or your real estate agent) will guide you through how to make an offer on a house in Canada. The offer includes the closing date (the date that you will be required to pay for the home and transfer ownership), the price (the total amount you agree to pay for the home), a deposit amount (an amount you pay when you make an offer as a deposit to show that your offer is serious – usually between 1% and 3% of the sale price), a request for a current land survey of the property (a document showing the bounds of the property you're buying), a home inspection (an inspection by an expert to report on the condition of the property), and a list of items, such as a dishwasher or lighting fixtures, that you would like included in the purchase price.

After submitting the offer, the seller typically comes back with a counteroffer that has revisions to the deal. This process can be stressful, but ultimately helps to make sure the agreement works for both parties.

Step #6: Obtain a mortgage

Once you have an accepted offer, it's time to get a mortgage. That process will be considerably easier if you already followed Step 2 and got pre-approved for a mortgage. This is where you can go back to your Scotiabank advisor who will then collect the necessary documents from you to confirm your pre-approval was based on, such as your income and down payment, and also confirm the value of your property.

There are many different ways to get a mortgage and a variety of mortgage products to choose from. Not sure what mortgages in Canada look like? We have you covered with this article here explaining some of the basics. You can also talk to your Scotiabank advisor about the product that's right for you as a first-time home buyer in Canada.

Step #7: Schedule a home inspection

Once your offer is accepted, it is important to follow through on having your new home inspected by a professional. Home inspectors will look for and evaluate mould, a damp basement, roof condition, plumbing problems, inferior electrical systems, and more.

Take care when choosing an inspector, as most anyone can claim to be one. Most provinces have associations that require inspectors to meet professional standards. You can also find more information about home inspectors from the Canadian Association of Home and Property Inspectors (CAHPI).

Here is where to find out about inspectors in your province:

Step #8: Finalize the sale

Closing day is the final step in the process of buying a first home in Canada. It's when you get the keys to your home and officially become a homeowner. Usually this includes meeting with a lawyer, who will ensure that all legal and mortgage documents are signed, the home is registered in your name, and that the down payment is transferred to the person selling the home.

  • Land transfer taxes are due and range from 0.5% to 4% of the property value
  • Legal fees may range from $500 to $1,000 or higher

Step #9: Be a responsible homeowner

You've finally done it! You've completed the process of buying a first home in Canada! Once you have moved in, remember to protect your investment by:

  • Submitting mortgage payments on time
  • Budgeting for ongoing homeownership costs (i.e. electricity, water, property taxes)
  • Saving money for emergency home repairs (e.g. roof, leaks, broken appliances
  • Making sure your home is protected through home insurance and mortgage protection insurance

If you are a first-time home buyer you may be eligible for the Government of Canada’s home buyers tax credit. You will be able to claim this when you file your income taxes for the year.

Good luck on your journey to Canadian homeownership! Remember that budgeting and planning are fundamental to your success. Scotiabank advisors are available to provide you advice and solutions at any point during this process. Call us today to book an appointment!

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Legal Disclaimer: This article is provided for information purposes only. It is not to be relied upon as investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and The Bank of Nova Scotia is not responsible to update this information. All third party sources are believed to be accurate and reliable as of the date of publication and The Bank of Nova Scotia does not guarantee its accuracy or reliability. Readers should consult their own professional advisor for specific investment and or tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.